Maryland Residential Consumer Survey: Views About ... · i Maryland Residential Consumer Survey: Views on Electricity Service and Deregulation Executive Summary The results of a telephone

Maryland Residential Consumer Survey:Views About Electricity Service and Deregulation

Prepared by:

Shelia CottenJoseph KirchnerDonald F. Norris

Assisted by:Laura Hudgins

Maryland Institute for Policy Analysis and ResearchUniversity of Maryland Baltimore County

January 2003

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Maryland Residential Consumer Survey:Views About Electricity Service and Deregulation . . . . . . . . . . . . . . . . . . . . 1

Utility Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Consumers and Maryland’s Electricity Deregulation Policy . . . . . . . 10

Rate Caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Choice Among Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Caps and Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Regulation of Electric Rates . . . . . . . . . . . . . . . . . . . . . . . . . 17

Choice and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Local Governments as Group Buyers . . . . . . . . . . . . . . . . . . . . . . . . . 19

Consumer Behavior as a Result of Policy Change . . . . . . . . . . . . . . . 21

Consumer Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Appendix A

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1

Sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1

Weighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2

Statistical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A5

Do Not Know and No Opinion Categories . . . . . . . . . . . . . . . . . . . . . A5

Sociodemographics of Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6

Consumer Status Characteristics of the Sample . . . . . . . . . . . . . . . . . A12

Appendix B

Maryland Office of the People’s Counsel Survey . . . . . . . . . . . . . . . . B1

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Maryland Residential Consumer Survey:Views on Electricity Service and Deregulation

Executive Summary

The results of a telephone survey of 1,035 households in Maryland provide the followinginsights about the attitudes of Maryland consumers about their electric service:

Satisfaction with Electric Service

# Maryland electricity consumers are mostly satisfied with the current price and reliabilityof their electricity service.

# If consumers have complaints or problems with their electricity service, they contact theirelectric companies. If the electric company does not resolve the problem, the majority ofpeople do not know who else to contact. Only 8.3 percent would contact the PublicService Commission.

# Most Maryland residential electricity consumers do not know if Maryland has agenciesthat regulate electricity rates or advocate for consumers and among those who do, fewcan name the agencies.

Understanding of Maryland’s Electric Choice Program

Consumers do not have a detailed understanding of Maryland’s Electric Choice Program. Theprogram specified a period of regulated and capped residential rates for electricity supplied bythe utility, but also permits consumers the option of purchasing electricity from a non-utilitysupplier at an unregulated price. The price caps are scheduled to come off in the next two tofour years, depending on the utility.

# Nearly two thirds (63.6 percent) of consumers knew that Maryland law permitsconsumers a choice among electricity suppliers. However, only 9.9 percent of theconsumers knew that the state currently caps electricity rates, and 40.2 percent believedthat rates were not capped. Only about one in five of the 9.9 percent who knew about therate caps were aware that the caps are scheduled to expire.

# More than two-thirds (67.9 percent) of consumers favor choice. Of those who preferchoice, 66.5 percent said it was important or very important to them.

# Consumers were divided over whether they preferred regulation: 44.8 percent preferredregulation of electric companies and 39.4 preferred not to have regulation.

# When choice is combined with deregulation, consumers were divided. A small plurality,43.5 percent, would be willing to have state regulation of prices eliminated in order tohave a choice among electricity suppliers. However, 39.8 percent would not be willingto end regulation to get choice, and 16.7 percent had no opinion or didn’t know.

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Perceptions of Price Changes with Deregulation

# About half (49.5 percent) of consumers believed that removing price caps alone wouldincrease the price of electricity, and 19.4 percent said it would make no difference. Only6.7 percent thought it would reduce prices and the remainder (24.4 percent) didn’t know.

# About 14.4 percent of consumers said that permitting a choice of an electricity supplieralone would increase the price of electricity. Slightly over one third (34.6 percent) ofconsumers believed that permitting a choice of an electricity supplier would reduce theprice of electricity. Slightly more (35.6 percent) said permitting a choice of supplierswould make no difference in the price.

# Consumers seemed to believe there would be less of an increase in electricity prices ifcaps were removed and they could choose a supplier. As discussed above, about half ofthe consumers thought that removing price caps would increase prices. However, thepercent of consumers who think prices will increase drops to less than one third (30.1percent) if they also have a choice of suppliers. The percentage of consumers who thinkit will make no difference increases from 19.4 percent to 35.4 percent.

# Respondents were also divided on whether they would be willing to give up regulation inorder to get choice. About two in five (39.8 percent) of the respondents would not bewilling to give up regulation for choice, while 43.5 percent would.

Opinions about Choosing a Supplier

# Few residential electricity consumers (only 51 out of 1,035) have tried to changesuppliers and fewer still have actually switched suppliers. Given the relatively highpreference for choice, this low number likely reflects the lack of energy suppliersactively marketing to consumers in Maryland.

# Two thirds of consumers said that a supplier would have to offer lower prices to get themto switch from their utility, while 21.8 percent said they would want a more reliableservice. When those who specified “lower prices” were asked how much of a pricereduction they would want, over half said they would need more than a 10 percentreduction in prices to switch (see Chart 1).

Chart 1

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Percent of respondents

1 Electric Choice participants currently include the four investor-owned utilities, SMECO and Choptank.Municipal electric companies are not participants.

2 Source: Maryland Public Service Commission.

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Maryland Residential Consumer Survey:Views About Electricity Service and Deregulation

Traditionally the electric utility provided two functions, a) the production or wholesale purchase of

electricity (the supply function) and b) distribution of the electricity to the consumer through local

electric power lines (the distribution function). These two functions have been separated in

Maryland as of July 1, 2000. Competition for retail consumers is permitted among suppliers under

a program called Electric Choice1, but the natural monopoly of distribution is still recognized and

regulated by the state. During a transition period, the regulation of rates has been replaced by

negotiated rate caps for investor-owned electricity suppliers. Switching is limited because very little

supplier competition currently exists for residential electricity consumers.

Maryland is served by four investor-owned electricity companies, five municipal electricity

companies and four consumer cooperatives. The investor-owned companies are: Pepco –

Montgomery and Prince George’s counties; Baltimore Gas & Electric (BGE) – Baltimore

metropolitan area (Baltimore City and Anne Arundel, Baltimore, Carroll, Harford, Howard and

parts of Calvert, Montgomery and Prince George’s counties); Allegheny Power – Western

Maryland (Allegany, Frederick, Garrett, Washington and part of Carroll counties); Conectiv –

Eastern Shore (Caroline, Cecil, Dorchester, Kent, Queen Anne’s, Somerset, Talbot, Wicomico, and

Worcester counties). See Map A.2 The municipal companies are: Berlin, Easton, Hagerstown,

Thurmont, and Williamsport. The cooperative companies are: Southern Maryland Electric

Cooperative (SMECO), A & N, Choptank, and Somerset.

Insert MAP A

2

In theory, deregulation is intended to lead to consumer choice and possibly lower prices as

3This problem is discussed in Maryland Office of People’s Counsel Report on Electric Choice, OPC 2002.Http://www.opc.state.md.us/consumer/pdf/ElChoiceReport.pdf.

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alternative electricity suppliers enter the market place. In practice, this is not happening as intended.

Only two competing electricity suppliers had entered the Pepco market region and had signed up

57,086 customers (through September 2002), about three percent of residential customers in the

state. Also, as of September 2002, only one competing electricity supplier had entered part of the

BGE market area. No other region of Maryland has competing electricity suppliers. Additionally,

consumers have thus far seen few benefits from this competition.3

The slow development of competition for retail electricity customers could present problems to

consumers. For example, if competition among suppliers has not developed by the scheduled

ending of rate caps, electricity supply rates will not be constrained by either regulation or

competition. Rate caps are scheduled to end in 2004 for Conectiv and Pepco residential customers,

2006 for BGE residential customers, and 2008 for Allegheny residential customers.

The Maryland Office of People’s Counsel (OPC) asked the Maryland Institute for Policy Analysis

and Research (MIPAR) of the University of Maryland, Baltimore County (UMBC) to conduct a

survey on the subject of electricity deregulation in the state. The primary purposes of the survey

were to elicit information on consumer views about their electricity service, their understanding of

electricity deregulation in Maryland and their opinions about Maryland’s policy to permit choice

among electricity suppliers and deregulate the price of electricity. OPC undertook this survey to

help identify programs to better serve residential electricity consumers in the state.

4

The survey, which was conducted during August 2002 among residential electricity customers only,

asked questions about a variety of issues, including: customers’ opinions about the current reliability

and price of electricity; their awareness of and opinion about the state’s policy governing electricity

rates and the choice of electric suppliers; and whether they had actually changed electricity

suppliers. The survey also asked consumers who they would contact if they have a problem or

complaint with electric service, and whether they knew of and their opinions about the Maryland

Public Service Commission and the Maryland Office of People’s Counsel. Finally, the survey

collected data about customer and household demographics, electricity usage, and customer status.

The survey included a random, stratified sample of 1,035 adults in households in four regions of

Maryland. These regions were Eastern Shore/Southern Maryland, Western Maryland, the Baltimore

metropolitan area, and the Washington metropolitan area. The survey over-sampled the Eastern

Shore/Southern Maryland and Western Maryland regions in order to ensure adequate numbers of

respondents for statistical analysis purposes. The counties encompassed in these regions are shown

in Table A-1 found in Appendix A. Trained interviewers from the opinion research firm of Mason-

Dixon, Inc. conducted the telephone interviews, which lasted an average of 12 minutes. This report

presents data from the survey in tables with written narrative to explain the data.

Data are reported at the state and regional levels, if the differences among the regions are

statistically significant at less than the .05 level. This means that there is less than a 5 percent

chance that differences among regions seen in the table occurred at random. Put another way, if the

survey was repeated with similarly randomly selected residential electricity customers from these

regions, one would expect to find similar results among the regions 95 percent of the time.

5

Regional differences may be statistically significant, but may not be substantively significant. This

would be the case, for example, if differences of only a few percentage points were found among

regions or if there was no policy or programmatic relevance to the differences. In cases such as this,

regional differences are not discussed.

Appendix A discusses the methodology used to conduct the survey, the weighting procedures, the

data analysis techniques used, a description of customer electricity usage and billing patterns, and

a description of the demographic characteristics of the sample. Appendix B contains the survey.

This report discusses “consumers” or “customers.” These are the respondents to the telephone

survey, Maryland’s residential electricity consumers or customers. The survey did not cover

industrial, commercial or government electricity users.

As discussed earlier, in order to produce a sufficient sample size to permit us to conduct tests for

statistical significance, we over-sampled in the Western Maryland and Eastern Shore/Southern

Maryland regions. This means that more customers were interviewed in these regions than their

proportion of the state population would suggest. To correct for this disproportionality in our

analysis, we weighted responses. We discuss weighting procedures in Appendix A.

The number of respondents reported in each table reflects this weighting and is rounded to the

nearest whole number. When respondents are summed across regions, rounding errors accumulate.

Because of this, statewide totals are not always fully consistent. In some tables, this may mean that

totals of 1,036 or 1,034 respondents are reported, even though 1,035 respondents were interviewed

(e.g., Table 10 reports a total of 1,036 responded statewide).

6

In some of the tables, the total number of respondents corresponds to the number of respondents

who gave a specific response to a previous question. However, a rounding error may prevent these

numbers from corresponding exactly. For example, Table 3 reports that 87 respondents reported

a decrease in their electric bills. Table 5 reports the main reason why respondents said that their

bills decreased. This question was asked only of the 87 respondents who reported a “decrease” in

Table 3. However, the table shows a total of 88 respondents. This is due to the rounding error.

These rounding errors are small, do not affect the findings or conclusions of the report and are a

normal consequence of statistical calculations in weighted samples.

Utility Value

In this section, we examine respondents’ satisfaction with various aspects of their current electricity

service and their perceptions of changes in electricity prices.

We asked consumers about their satisfaction with the price of electricity. Table 1 shows that 61.6

percent of customers stated that they were satisfied while only 17.2 percent report being dissatisfied

with the price they paid for electricity. Customers in the Eastern Shore/Southern Maryland and

Western Maryland region were the most satisfied with the price of electricity. Over 70 percent of

the customers from these regions were satisfied. By contrast, only 61.2 percent and 55.7 percent

of respondents in the Baltimore and Washington metropolitan areas, respectively, reported being

satisfied with the price of electricity.

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Table 1Customer satisfaction with price of electricity

Maryland Statewide Eastern Shore/So. Maryland

WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Satisfied 633 61.6 93 71.5 60 71.4 304 61.2 176 55.7

Neutral 217 21.1 21 16.2 17 20.2 100 20.1 79 25.0

Dissatisfied 177 17.2 16 12.3 7 8.3 93 18.7 61 19.3

Total 1,027 100 130 100 84 100 497 100 316 100Note: Regional differences were statistically significant at the p = < .01 level.

We next asked consumers about their satisfaction with the reliability of their electricity services.

Table 2 shows that most customers (86.7 percent) were satisfied. Less than 6 percent were

dissatisfied. The level of satisfaction across Maryland regions ranged from a low of 80.6 percent

in the Washington metropolitan region to a high of 92.4 percent in the Eastern Shore/Southern

Maryland region. Overall, satisfaction levels were high across the regions. However, consumers

in the Washington metropolitan region were less satisfied with the reliability of electricity.

Table 2Customer satisfaction with the reliability of electricity


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Satisfied 897 86.7 121 92.4 73 88.0 445 88.8 258 80.6

Neutral 84 8.1 5 3.8 4 4.8 41 8.2 34 10.6

Dissatisfied 54 5.2 5 3.8 6 7.2 15 3.0 28 8.8


4These answers are based on consumer perceptions and recall. Given the nature of a telephone survey, time did notpermit consumers to check their electricity billing records.

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We asked respondents whether their electric bills had increased or decreased in the past year.4

Table 3 shows that nearly half of all respondents (47.3 percent) reported that their electric bills have

stayed about the same over the past year, when compared to the previous year. However, 43.5

percent said that their electric bills had increased during this time period and only 9.2 percent

reported that their bills had decreased during this time period. Consumers in the Washington and

Baltimore metropolitan regions were more likely to report that their electric bills had increased

during the past year than consumers in other Maryland regions.

Table 3Increase or decrease in electric bills


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Increased 411 43.5 45 35.4 30 37.0 191 42.8 145 49.8

Decreased 87 9.2 7 5.5 6 7.4 48 10.8 26 8.9

Stayed the same 447 47.3 75 59.1 45 55.6 207 46.4 120 41.2

Total 945 100 127 100 81 100 446 100 291 100Note: Regional differences were statistically significant at the p = < 0.001 level.

We also wanted to know from among the respondents who reported that their electric bills had

increased, why they believed that these increases had occurred. Table 4 shows that among those

who reported increases in their electric bills, the main reasons given were that electric rates

increased (39.6 percent), because they used more electricity (23.8 percent), or because both rates

increased and they used more electricity (32.4 percent). Regional differences were not statistically

significant.

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Table 4Main reasons consumers believed electric bills increased

Maryland Statewide

# %

Used more electricity 97 23.8

Electric rates increased 161 39.6

Both 132 32.4

For some other reason 17 4.2

Total 407 100 Note: Regional differences were not statistically significant.

It is particularly important for policymakers to note that even though electricity rates did not

increase because they were capped during this time period, 39.6 percent of respondents who reported

that their bills had increased said that it was only because electricity rates had increased. These

consumers, however, represent only 17 percent of all respondents. If they are added to those who

perceived that bills increased because they both used more electricity and the rates increased, the

figure for those who do not understand that their rates did not increase equals 72 percent of

respondents who believed their bills increased. This figure represents 31.1 percent of all

respondents.

We also wanted to know why respondents felt that their bills had decreased. Table 5 shows that

among the respondents who reported that their bills had decreased, the majority reported that it was

because they used less electricity (70.5 percent). Less than 4 in 100 (3.4 percent) said that electric

rates had decreased, and 19.3 percent reported both their use of electricity and the electric rates

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decreased. In combination, just over one in five (22.7 percent) of consumers who thought their bills

decreased believed the decrease resulted in part from a decrease in electricity rates.

Table 5Main reasons consumers believed electric bills decreased

Maryland Statewide

# %

Used less electricity 62 70.5

Electric rates decreased 3 3.4

Both 17 19.3

For some other reason 6 6.8


The results presented in this section show that the vast majority of Maryland respondents were

satisfied with the price and reliability of their electricity service, although respondents from

Baltimore and Washington metropolitan regions were less satisfied with the price of electricity than

those from other regions. In addition, almost one-third of respondents inaccurately believed that

increasing electricity rates had increased their electricity bills during the past year. A far smaller

portion of respondents (2.1 percent) inaccurately believed that decreasing electric rates had lowered

their electric bills during the past year.

Consumers and Maryland’s Electricity Deregulation Policy

This section examines the extent of consumer awareness of Maryland’s electricity deregulation

policy and the implementation of rate caps, choice among electricity suppliers and regulation of

electricity rates. It also examines consumer opinions of these policies.

5Since one goal of the survey was to assess the knowledge or awareness of consumers on issues of regulation, ratecaps and choice among electricity suppliers, interviewers did not inform or educate respondents about current or plannedimplementation of the policies prior to asking questions about the policies.

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Rate Caps

To ascertain whether consumers were aware of rate caps, the survey asked, “To your knowledge, are

electric rates capped in Maryland?”5 The results show that very few Maryland electricity consumers

knew that rates were capped (9.9 percent). Half (50.0 percent) said they did not know whether

electric rates were capped in Maryland, while 40.2 percent incorrectly believed that rates were not

capped. Consumers in the Eastern Shore/Southern Maryland and Western Maryland were slightly

more well informed than consumers in the Baltimore and Washington metropolitan regions.

Table 6Are electricity rates capped in Maryland?

Maryland Statewide Eastern Shore/So. Maryland Western MD

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 102 9.9 17 13.0 11 13.1 40 8.0 34 10.7

No 416 40.2 42 32.1 24 28.6 205 40.9 145 45.5

Do not know 517 50.0 72 55.0 49 58.3 256 51.1 140 43.9


We asked the 102 consumers who correctly responded to the question about rate caps if they knew

whether caps were scheduled to be removed within the next few years. Table 7 shows that those

consumers were largely unaware that the caps would be removed. Only 19.4 percent of those who

were aware of rate caps knew that caps would be removed, while 58.3 percent said they did not know,

and 22.3 percent said that caps would not be removed. Regional differences were not statistically

12

significant. Logically, those who did not know that rates are capped would not know that they are

scheduled to be removed. Consequently, only 20 of 1,035 (1.9 percent) of all respondents knew that

rate caps would be removed.

Table 7Are electricity rate caps in Maryland scheduled to be removed?

Maryland Statewide

# %

Yes 20 19.4

No 23 22.3

Do not know 60 58.3

Total 103 100Note: Regional differences were not statistically significant.

The results from Tables 6 and 7 show that Maryland consumers were either unaware of the existence

of rate caps or incorrectly believed that rates were not capped and were not aware that rate caps are

scheduled to be removed. These results are consistent with the results in Tables 3-5, where 31

percent of all respondents incorrectly believed that their increased electric bills in the past year were

due, at least partially, to an increase in rates, and 2.1 percent believed that their decreased bills were,

at least partially, due to a decrease in rates. In the Baltimore and Washington metropolitan areas, a

higher percent than in the other regions incorrectly believed that rates were not capped. These are

the same regions that expressed higher levels of dissatisfaction with the price of electricity. These

data suggest that the public needs more information about the potential for changes in their electricity

bills.

6The question was worded generally and did not refer to Maryland specifically: “In your opinion, if electric rateswere capped, would removing the cap increase, decrease, or make no difference to electricity prices?”

13

Next we asked respondents for their opinions about the impact of removing the rate caps on

electricity prices.6 Table 8 shows that half (49.5 percent) of consumers believed that removing rate

caps would increase rates. Nearly one in five (19.4 percent) believed it would make no difference

and 6.7 percent believed rates would decrease. About a quarter (24.4 percent) of respondents did not

know what would happen if price caps were removed. If we exclude the “do not knows,” two thirds

of respondents believed that removal of caps would result in a price increase. Differences by region

were not statistically significant.

Table 8Impact of removing the rate cap on electricity prices

Maryland Statewide

# %

Increase 512 49.5

Make no difference 200 19.4

Decrease 70 6.7

Do not know 253 24.4

Total 1,035 100Note: Regional differences were not statistically significant.

Choice Among Suppliers

Next, we asked whether consumers believed that Maryland law allows consumers to have a choice

among electric suppliers. Nearly two-thirds (63.6 percent) believed that choice is permitted (Table

9). Twenty percent believed that there was no choice, while 16.4 percent said that they did not know.

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Table 9Does Maryland law allow consumers a choice among electricity suppliers?


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 660 63.6 70 53.4 50 59.5 328 65.3 212 66.3

No 207 20.0 44 33.6 21 25.0 77 15.3 65 20.3

Do not know 170 16.4 17 13.0 13 15.5 97 19.3 43 13.4


There was greater awareness about choice among consumers in the Baltimore and Washington

metropolitan regions than in the Eastern Shore/Southern Maryland and Western Maryland regions.

This should not be surprising because there has been marketing activity in the Pepco and BGE service

areas, and both the Public Service Commission and the electric utilities have engaged in a public

awareness campaign.

We asked consumers for their opinions about the effects of allowing a choice of electricity suppliers

on electricity rates. Slightly over one third (35.8 percent) believed permitting choice would make

no difference, while a similar and only slightly smaller fraction (34.6 percent) said rates would

decrease. Nearly equal proportions believed rates would increase (14.4 percent) or did not know

(15.3 percent) (Table 10). Regional differences show that consumers in the Eastern Shore/Southern

Maryland and Washington metropolitan regions were somewhat more likely to believe that consumer

choice would result in increased rates.

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Table 10How would consumer choice of electricity suppliers affect electricity prices?


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Increase 149 14.4 23 17.6 12 14.3 53 10.6 61 19.1

Make no difference 371 35.8 46 35.1 31 36.9 189 37.6 105 32.9

Decrease 358 34.6 49 37.4 33 39.3 168 33.5 108 33.9

Do not know 158 15.3 13 9.9 8 9.5 92 18.3 45 14.1


These data would suggest that only slightly more than one third of consumers believed that there is

a price advantage (i.e., prices would decrease) to Marylanders having a choice among electricity

suppliers, while over half felt there would be either no advantage or that choice would be financially

detrimental.

Caps and Choice

Current Maryland policy has established negotiated electricity rate caps in order to protect consumers

during a fixed period of time while new suppliers enter the market. Maryland consumers were

divided nearly equally in their opinions about the impact of the combination of removing rate caps

and providing consumers a choice of electricity suppliers. Table 11 shows that 30.1 percent of

Maryland consumers believed that the combination of these two policies would increase prices, 35.4

percent believed that it would make no difference and 34.5 percent believed that it would decrease

prices. Regional differences were not statistically significant.

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Table 11 Impact of removing electricity price caps and providing

consumer choice among electricity suppliers on electricity prices

Maryland Statewide

# %

Increase 287 30.1

Make no difference 337 35.4

Decrease 329 34.5


Choice

Independent of consumers’ awareness of the policy of choice, it might be important to policymakers

to know whether consumers prefer choice among electricity suppliers and how important choice is

to them. (The importance question was only asked of those who preferred choice.) Table 12 shows

that nearly 7 in 10 consumers (67.9 percent) preferred choice. Of those who prefer choice, two thirds

(66.5 percent) said that choice was either very important or important. Differences among the

regions were not statistically significant.

Table 12Choice of electricity suppliers

Maryland Statewide

# %

Prefer to havea choice

Yes 652 67.9

No 308 32.1

Total 960 100

Importance of havinga choice

Very Important/Important 432 66.5

Neutral 167 25.7

Not important/Not important at all 51 7.9


17

These data suggest that consumers support the introduction of choice, even though they are divided

(Tables 10 and 11) on the impact of this policy on prices.

Regulation of Electric Rates

Additionally, it might be useful for policymakers to know whether consumers preferred regulation

of electricity rates. Here, slightly more Maryland electricity consumers (44.8 percent) preferred

regulation of electricity rates than did not prefer regulation (39.4 percent). Sixteen percent did not

know or had no opinion (Table 13). Of those who preferred regulation, 75.4 percent believed it was

important or very important that electric rates be regulated by a state agency. Regional differences

show that consumers in Western Maryland and Eastern Shore/Southern Maryland were less likely

to prefer regulation. Regional differences were not statistically significant for the importance

question. Overall then, Maryland electricity consumers are divided on the desirability of state

regulation of electricity rates, with a small preference for state regulation of electricity rates.

Table 13Regulation of electricity rates by a state agency

A. Prefer regulation

MarylandStatewide

Eastern Shore/So. Maryland

WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 464 44.8 46 35.1 32 38.1 220 43.8 166 52.0

No 408 39.4 60 45.8 34 40.5 214 42.6 100 31.3

Don’t know/ No opinion 164 15.8 25 19.1 18 21.4 68 13.5 53 16.6

Total 1036 100 131 100 84 100 502 100 319 100

Note: Regional differences were statistically significant at the p = < 0.001 level.

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B. Importance of regulation

Maryland Statewide

# %

Very Important/Important 349 75.4

Neutral 90 19.4

Important/Not important at all 24 5.2


Choice and Regulation

When we asked consumers their preferences regarding choice and deregulation combined, the results

were mixed. A small plurality (43.5 percent) of Maryland consumers said that they would be willing

to have state regulation of electric prices eliminated in order to have a choice among electricity

suppliers. However, only a slightly smaller fraction (39.8 percent) would not be willing to have

regulation end in order to get choice, while 16.7 percent either did not know or had no opinion.

Washington metropolitan area consumers, followed by Baltimore metropolitan area consumers, were

the least willing to have regulation end in order to gain choice among electricity suppliers.

Table 14In order to have a choice among electricity suppliers, would consumers be willing to have

state regulation of electric prices eliminated?


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 450 43.5 71 54.6 42 50.0 214 42.7 123 38.4

No 412 39.8 39 30.0 27 32.1 193 38.5 153 47.8

Do not know/ No opinion 173 16.7 20 15.4 15 17.9 94 18.8 44 13.8


19

To summarize, consumers strongly prefer the single policy of consumer choice of electricity

suppliers and two thirds of those consumers feel that choice is either important or very important.

Consumers have a slight preference for the single policy of electricity rate regulation and three

quarters of those feel that regulation is important or very important However, when the introduction

of choice was combined with deregulation, consumers were sharply divided, although they showed

a slight preference for the policy of consumer choice and price deregulation.

Local Governments as Group Buyers

One suggested approach that many believe could increase competition and hold down electricity

prices following deregulation is for local governments to act as group buyers of electricity. The

survey asked consumers whether this should be permitted. Table 15 shows that nearly half (47.7

percent) of consumers did not believe that local governments should be permitted to act as group

buyers of electricity. More than one third (36.5 percent) believed that they should, and 15.8 percent

did not know or had no opinion. Significantly more Washington metropolitan area consumers

supported the idea. Support was lowest in the Baltimore metropolitan area.

Table 15Should local governments be permitted to act as group buyers of electricity?


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 378 36.5 48 36.6 30 35.7 137 27.4 163 50.9

No 494 47.7 67 51.1 45 53.6 263 52.6 119 37.2

Do not know / No opinion 163 15.8 16 12.2 9 10.7 100 20.0 38 11.9

Total 1,035 100 131 100 84 100 500 100 320 100Note: Regional differences were statistically significant at the p = < 0.001 level.

20

Although this question was worded in a straight-forward manner, “Should local governments be

permitted to act as group buyers of electricity for consumers?” it is not clear to the researchers

whether respondents fully understood the concept of a local government buyers group and how such

a group might operate.

These data suggest that while most consumers appeared to understand that Maryland policy permits

choice, few (9.9 percent) understood the current situation with rates or what will happen under the

state’s deregulation program in the next few years. Indeed, 40.2 percent believed that rates were not

capped and fewer still understood that rate caps are scheduled to be eliminated. Evidently, efforts

have been quite successful to inform consumers about the policy of providing choice. However, very

few consumers are aware of rate caps and their scheduled removal.

Despite the uneven understanding of the policy on caps (9.9 percent said caps exist) and choice (63.6

percent said choice exists), consumers were nearly evenly divided about whether they believed a

price advantage would result from a policy where price caps are removed and consumers have a

choice of suppliers: 30.1 percent thought it would increase the price of electricity, 35.4 percent felt

it would make no difference, and 34.5 percent felt it would decrease the price of electricity. When

asked solely about the electric choice portion of the policy, consumers were supportive (67.9 percent

preferred choice). However, when asked if they would be willing to give up state rate regulation in

order to have choice among suppliers, consumers were sharply divided: 43.5 percent said they would

be willing to give up state regulation to get choice versus 39.8 percent who would not (Table 14).

21

Consumer Behavior as a Result of Policy Change

The next few questions examine consumer behavior as a result of Maryland’s policy permitting

choice among electricity suppliers. That is, we asked whether consumers had tried to change

suppliers, why they had done so (or why not), and what alternative suppliers would need to offer

consumers to get them to switch.

We first asked consumers if they had tried to change electricity suppliers. As shown in Table 16,

overall only 4.9 percent (n=51) had tried to switch suppliers. This small number is understandable

because of the highly limited choices available at the time of the survey; only the Washington and

parts of the Baltimore metropolitan regions have active suppliers. All of the consumers who tried

to change were in the Baltimore metropolitan and Washington metropolitan regions. In the

Washington metropolitan region, 7.8 percent of consumers had attempted to change suppliers.

Table 16Consumers who have tried to change electricity suppliers


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 51 4.9 1 0.8 0 0 25 5.0 25 7.8

No 980 95.1 129 99.2 84 100 473 95.0 294 92.2

Total 1,035 100 130 100 84 100 498 100 319 100Note: Regional differences were statistically significant at the p = < 0.00 level.

The survey also inquired why consumers tried to change electricity suppliers. Table 17 shows that

90.2 percent of the consumers who attempted to change suppliers (n=46) did so to get lower prices

7The sample in Table 18 (n = 45) is smaller than in Table 17 (n = 51) because five respondents reportedchanging suppliers in regions where no alternative supplier existed. Therefore, they were removed from Table 18.

22

for electricity. No other reason was given by more than 4 percent of respondents. Regional

differences were not statistically significant.

Table 17Main reasons why consumers attempted to change suppliers

Maryland Statewide

# %

Lower prices 46 90.2

More reliable service (Fewer outages) 2 4.0

Reputation of the supplier 1 2.0

Dissatisfied with current supplier 2 3.8


We also asked whether those who had attempted to change suppliers had actually changed. Table

18 shows that only 12 of the 45 Maryland respondents who attempted to change suppliers actually

changed them.7

Table 18Did consumers actually change suppliers?

Maryland Statewide

# %

Yes 12 26.7

No 33 73.3

Total 45 100

23

Next, the survey asked respondents who had attempted, but did not actually change suppliers, the

main reasons why they stayed with their current supplier. Table 19 shows 16 respondents said they

did not change because there was no price advantage, 8 respondents said because there was no service

advantage, and 8 respondents said because the process was too complicated. Regional differences

were not statistically significant.

Readers should note that the number of respondents reported in Table 16 through Table 19 are quite

small. Thus, extrapolation of these findings to the behavior of all Maryland electricity consumers

would not be warranted.

Table 19Main reasons consumers remained with their current suppliers

Maryland Statewide

# %

No other supplier in the area 3 9.4

No price advantage 16 48.5

No service advantage 8 23.5

Satisfied with current supplier 1 3.1

Not interested in changing 1 3.1

Process was too complicated 8 24.2

Do not know 3 9.4 Note: regional differences were not statistically significant.

The survey asked all consumers what a competing electricity supplier would need to offer in order for

them to consider switching suppliers (Table 20). Two thirds (68 percent) said lower prices, 21.8

24

percent said more reliable service, 13.2 percent said nothing could get them to switch, 17.1 percent

either did not know or gave other reasons. Regional differences were statistically significant.

Consumers in Western Maryland and Eastern/Southern Maryland put greater emphasis on price.

Consumers in the Washington metropolitan region were more likely to state that nothing could get

them to change suppliers.

Table 20 What would a competing electricity supplier need to offer consumers in order for them toswitch?

MarylandStatewide


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Lower prices* 691 68.0 102 79.1 62 74.7 328 66.0 199 64.8

More reliable service*** 222 21.8

Nothing could make meswitch*

134 13.2 9 7.0 7 8.3 64 12.9 54 17.6

Do not know* 128 12.6 17 13.1 12 14.3 78 15.7 21 6.8

Other*** 46 4.5*Regional differences were statistically significant at the p = < 0.01 level.***Regional differences were not statistically significant.

Next, the survey asked Maryland consumers, who answered “lower prices” to the question about what

would induce them to change (n=691), how much of a price reduction would be necessary to induce

them to change suppliers. Table 21 shows that the majority of these Maryland consumers (52.5

percent) would need more than a 10 percent reduction in prices. One third (36.2 percent) would need

a reduction of between 6 and 10 percent. Regional differences were not statistically significant.

25

Table 21Percentage price reduction needed for consumers to consider switching suppliers

Maryland Statewide

# %

1% to 5% 74 11.3

6% to 10% 238 36.2

11% to 15% 129 19.6

16% to 20 % 107 16.3

More than 20% 109 16.6


These data suggest that a price reduction of more than five percent would be needed to induce most

consumers to change suppliers, if or when a viable choice became available.

Consumer Rights

This section examines consumers’ responses concerning whom they would contact if they had

problems or complaints with their electric service and their knowledge about agencies that exist to

assist Maryland residents with electricity related issues. We asked consumers whom they would

contact if they had a problem or complaint with their electric service. This was an open-ended

question (i.e. consumers were not prompted and could provide any answer they desired). More than

9 out of 10 (93.8 percent) of respondents voluntarily reported that they would contact their electricity

company or the customer service department of their electricity company (Table 22). No other

responses were reported by more than 4.3 percent of consumers. There were no statistically

significant differences across the regions.

8The percent of respondents choosing yes for each of the responses in Table 23 does not add up to 100 percentbecause respondents could choose more than one response.

26

Table 22If you had a problem with your electricity service, whom would you contact?

Maryland Statewide

N # %

Electric Company 1036 972 93.8

All Others 1035 66 6.4 Note: Regional differences were not statistically significant.

We then asked consumers whom they would contact if they did not get a satisfactory response from

their first contact. Over half (55.4 percent) said that they did not know whom they would contact

while 15.7 percent reported that they would contact their electric company again (Table 23). Only 8.3

percent reported that they would contact the Maryland Public Service Commission.8

Table 23If no satisfactory response, whom would you contact?

MarylandStatewide


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Electric company** 163 15.7 29 22.1 16 19.0 80 16.0 38 11.9

Attorney General’s office*** 32 3.1

Better Business Bureau*** 60 5.8

Office of People’sCounsel***

2 0.2

Public Service Commission* 86 8.3 11 8.4 6 7.1 24 4.8 45 14.1

Other elected officials*** 37 3.6

Other*** 43 4.2

No one*** 47 4.5

Do not know*** 573 55.4*Regional differences were statistically significant at the p = < 0.01 level.**Regional differences were statistically significant at the p = < 0.05 level.***Regional differences were not statistically significant.

27

These results suggest that consumers would first call their electricity companies with problems and

complaints and that most consumers did not know to whom they could turn if their electricity

company did not resolve their problem or complaint. From these responses, it is also evident that

consumers were not aware of various state agencies (e.g., the Attorney General’s Office, the Maryland

Public Service Commission or the Office of People’s Counsel) that could assist them with complaints

or problems.

The next series of questions examined respondents’ knowledge about agencies in Maryland that either

regulate electric companies or advocate for electricity consumers. To begin with, almost half of the

respondents (48.5 percent) did not know whether Maryland had an agency that regulated electric

companies (see Table 24). Only one third of respondents (34.1) correctly said that Maryland has an

agency that regulates electric companies, while 17.3 percent incorrectly reported that Maryland did

not have such an agency. Washington metropolitan respondents were much more likely than were

respondents of other Maryland regions to correctly state that Maryland has an agency that regulates

electric companies.

Table 24Does Maryland have an agency that regulates electric companies?


Western Maryland BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Yes 353 34.1 36 27.5 20 23.8 166 33.2 131 41.1

No 179 17.3 27 20.6 15 17.9 78 15.6 59 18.5

Do not know 502 48.5 68 51.9 49 58.3 256 51.2 129 40.4


28

Of those respondents who correctly said that Maryland had such an agency (n=353), over two thirds

(68.9 percent) did not know the name of the agency (see Table 25). Only about 3 in 10 (29.4 percent)

correctly identified the Maryland Public Service Commission as the agency that regulates electric

companies. Baltimore metropolitan respondents were much more likely to correctly name this agency

than were those of other regions. (This was an open-ended question and the Public Service

Commission was not named to respondents.)

Table 25Which agency regulates electric companies?

MarylandStatewide


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Public Service Commission 104 29.4 8 22.2 4 20.0 69 41.6 23 17.4

Other 6 1.7 0 0 0 0 1 0.6 5 3.8

Do not know 244 68.9 28 77.8 16 80.0 96 57.8 104 78.8


We also wanted to determine consumers’ impressions of this agency. As Table 26 shows, of those

who knew that Maryland had an agency that regulated electricity companies, most (65.5 percent)

were neutral in terms of their impressions of the agency. About one quarter (25.8 percent) had a

mostly positive impression of the agency, and 8.7 percent had a mostly negative impression. No

significant differences existed among regions.

29

Table 26 Impression of the agency that regulates electric companies

Maryland Statewide

# %

Mostly positive 89 25.8

Neutral 226 65.5

Mostly negative 30 8.7

Total 345 100 Note: Regional differences were statistically not significant.

Next, we asked all respondents whether Maryland had an agency that advocated on behalf of

residential electricity consumers. Only 19.1 percent correctly identified that Maryland has such an

agency, while a nearly identical fraction (19.2 percent) incorrectly said that Maryland does not have

such an agency. The majority of respondents (61.4 percent) did not know whether Maryland had such

an agency (Table 27). Washington metropolitan respondents were much more likely than those in

either Western Maryland or Eastern Shore/Southern Maryland to say that Maryland has such an

agency.

Table 27Does Maryland have an agency that advocates on behalf of residential electricity consumers?

Maryland Statewide Eastern Shore/ So.Maryland

WesternMaryland

Baltimore Metro WashingtonMetro

# % # % # % # % # %

Yes 198 19.1 12 9.2 6 7.1 87 17.4 93 29.1

No 202 19.2 31 23.8 17 20.2 95 19.0 59 18.4

Do not know 635 61.4 87 66.9 61 72.6 319 63.7 168 52.5


30

We also wanted to know whether respondents who knew that Maryland had an advocacy agency for

electricity consumers knew the name of this agency. Of these, 87.4 percent could not identify the

name of this agency, and only 17 (or 8.6 percent) knew that the name was the Maryland Office of

People’s Counsel. This number (17) equates to 1.7 percent of the overall sample. No statistically

significant variations existed across regions.

Table 28Name of the agency that advocates on behalf of

residential electricity consumers

Maryland Statewide

# %

Office of People’s Counsel 17 8.6

Other 8 4.0

Do not know 173 87.4


The survey then asked those who knew there was an advocacy agency for their impressions of the

agency. Because most people who knew that there was an agency did not know its name, it is not

surprising that their impressions were mostly neutral (58.4 percent). However, nearly 4 in 10 (38.9

percent) held a mostly positive impression (Table 29). Fewer than 3 percent of respondents said their

impressions of the agency were mostly negative. No statistically significant differences existed across

the regions.

31

Table 29Impression of the agency that advocates on behalf of residential electricity consumers

Maryland Statewide

# %

Mostly positive 74 38.9

Neutral 111 58.4

Mostly negative 5 2.6


From these results, it seems that both the Maryland Public Service Commission and the Maryland

Office of People’s Counsel lack recognition among residential electricity consumers in Maryland.

Moreover, of the respondents who knew of these agencies, the majority were mostly neutral in their

impressions of them.

32

Conclusion

The data from this survey of residential electricity consumers in Maryland support at least the

following significant conclusions:

# Overall, Maryland electricity consumers are mostly satisfied with the price and reliability of

their electricity service.

# If consumers have complaints or problems with their electricity service, they contact their

electric companies. If the electric company does not resolve the problem, the majority of

people do not know whom else to contact, and only 8.3 percent would contact the Public

Service Commission.

# Most Maryland residential electricity consumers do not know if Maryland has agencies that

regulate electricity rates or advocate for consumers. Among those consumers who do, few

can name the agencies.

# Consumers do not have a full understanding of Maryland's policy of choice among electric

suppliers and deregulation of electricity rates and the status of its implementation. Nearly two

thirds (63.6 percent) of consumers knew that Maryland law permits consumers a choice among

electricity suppliers. However, only 9.9 percent of consumers knew that the state currently

caps electricity rates, and 40.2 percent believed that rates were not capped. Of those who

knew about the rate caps, 9.9 percent of the sample, fewer than one in five (19.4 percent) were

33

aware that rates caps are scheduled to be removed. Of all consumers surveyed, only 2 percent

knew that price caps will be removed.

# About half (49.5 percent) of consumers believed that removing caps alone would increase the

price of electricity, and 19.4 percent said it would make no difference. Slightly over one third

(34.6 percent) of consumers believed that permitting a choice of an electricity supplier would

reduce the price of electricity; slightly more (35.6 percent) said that it would make no

difference in the price, and 14.4 percent said it would increase the price. Consumers were

nearly equally divided as to whether they believed there would be a price advantage if they

could choose a supplier and did not have rate caps. Nearly one third (30.1 percent) thought

it would increase the price of electricity, 35.4 percent felt it would make no difference and

34.5 percent felt it would decrease the price of electricity.

# Consumers seem to prefer choice. Two thirds (67.9 percent) of respondents preferred choice.

Of those who preferred choice, almost two thirds (66.5 percent) say it was very important or

important. Consumers were divided over whether they preferred regulation: 44.8 percent

prefer regulation of electric companies and 39.4 preferred not to have regulation.

# Respondents were also divided on whether they would be willing to give up regulation in order

to get choice. About two in five (39.8 percent) of the respondents would not be willing give

up regulation for choice, while 43.5 percent would.

34

# Few residential electricity customers (only 51 out of a sample of 1035) have tried to change

suppliers and fewer still have actually switched suppliers. Given the relative preference for

choice, this low number likely reflects the limited choice available to consumers.

A1

Appendix A

Methodology

The data presented in this study were gathered through a survey prepared by the Maryland Institute

for Policy Analysis and Research (MIPAR) of the University of Maryland, Baltimore County (UMBC)

for the Maryland Office of People’s Counsel (OPC). The survey was administered by the public

opinion research firm, Mason-Dixon, Inc., during August 2002, using a Computer Assisted Telephone

Interviewing system and a random digit dialing method.

The survey consisted of both open-ended and close-ended questions and took approximately 12

minutes to complete. We used screening questions to ensure that only adult heads of households in

Maryland in which someone living in that household paid the electric bill were included in the survey.

Thus, the unit of analysis for this study is the adult head of household.

Sampling

The survey used stratified random sampling to ensure that the appropriate respondents representative

of the four geographic regions in Maryland were selected for interviews. The regions were chosen

by the OPC and included: Eastern Shore/Southern Maryland, Western Maryland, Baltimore

metropolitan, and Washington metropolitan. The counties that compose these regions are shown in

Table A-1.

A2

Table A-1Counties in each Region

Region County

Eastern Shore / Southern Maryland CalvertCarolineCecilCharlesDorchesterKentQueen Anne’sSt Mary’sSomersetTalbotWicomicoWorcester

Western Maryland AlleganyFrederickGarrettWashington

Baltimore Metro Baltimore CityAnne ArundelBaltimore CountyCarrollHarfordHoward

Washington Metro MontgomeryPrince George’s

Weighting

The survey was designed to be representative of the State of Maryland and the four selected regions

noted earlier. Most of Maryland's population resides in the Baltimore and Washington metropolitan

areas. This presented a problem when designing the sample for the survey. To be representative of

the state, there should be more respondents from the Baltimore and Washington areas in proportion

to their greater population. Yet, in order to undertake statistical analysis of the data by region, we

needed to have a minimum of 200 respondents in each region. To have a minimum of 200 in Western

Maryland and the Eastern Shore/Southern Maryland and proportionally more respondents in the

A3

Baltimore and Washington area would have required a sample size that would have been prohibitively

large and expensive.

To solve this problem, we over-sampled in the Eastern Shore/Southern Maryland and Western

Maryland regions and weighted the results to compensate for the disproportionate sampling. Thus, the

sample included 200 respondents in the Eastern Shore/Southern Maryland, 200 in Western Maryland,

380 in the Baltimore metropolitan area and 255 in the Washington metropolitan area, for total of 1,035

respondents statewide. This produced a sample that is disproportionate to the population in these

regions. The weighting (discussed below) enabled us to return proportionality to the sample.

The Computer Assisted Telephone Interviewing software randomly selects telephone numbers to

achieve a sample representative of the population of Maryland and the regions. The sampling frame

here is slightly different. It includes Maryland residents 18 years of age or older in households where

someone pays the electric bill. This sample is more closely related to Maryland households than to

the total population of the state. To account for the discrepancy between households and population,

our weights were matched to Bureau of the Census data on Maryland households per county.

Weights were calculated by using information on the ratio of households in each county as a percent

of households in the state and the ratio of respondents in each county as a percent of total respondents

in the state. The weight for each county is set so that when it is multiplied by the respondent ratio,

it equals the Census-based household ratio.

A4

The exact weight for a county is derived as follows:

r

rw

h

h

c

c

s cc

c

s

∑ ∑=*

Where, rc is the number of respondents from county c, is the sum of respondents across allrc

s

∑

counties in the state (or the total number of respondents in the State), hc is the number of households

(2000 Census) in county c, is the sum of households across all counties in the state, and wc ishc

s

∑

the weight for county c.

Solving for wc, yields:

wh

h

r

rcc

c

sc

s

c=∑

∑*

A5

Statistical Analysis

The results presented in this report include univariate (simple frequency distributions) and bivariate

analyses (cross-tabulations) of the data. Results reported in each table include a cross-tabulation

between the responses to questions and the four regions of Maryland. The Chi-square statistic was

employed to determine if statistically significant differences existed across the regions. Based upon

testing the null hypothesis that no differences existed across regions, if a level of significance of .05

or lower is obtained, it was concluded that statistically significant differences existed across the

regions in the question being asked. If significant regional differences existed, the responses by region

and the state in each table along with the level of statistical significance were reported. If the

differences among regions were not statistically significant, they were not reported.

Do Not Know and No Opinion Categories

This report presents “do not know” or “no opinion” answers only when 10 percent or more

respondents responded this way. This choice may produce slight distortions when comparing across

tables. For example, Table 10, which reports 15 percent “do not know,” indicates that 36 percent of

consumers believe that the introduction of consumer choice would result in a decrease in rates. Table

11, which does not report the 8 percent “did not knows,” shows that virtually the same percentage (35

percent) believe that the introduction of choice, combined with the termination of rate caps would

result in a decrease in rates. One could conclude that consumers do not believe that the ending of caps

would make a difference. However, if the 8 percent “do not know” category was included, only 32

percent of respondents would believe that the combined policy would result in decreased prices. This

would change the conclusion from “making no difference” to “makes little difference.” However,

A6

because the level of 10 percent “do not know” or “no opinion” is quite small (90 percent of

respondents answered the question), the impact on this analysis will be inconsequential.

Sociodemographics of Sample

The following section compares the sociodemographic characteristics of the weighted survey sample

to the characteristics of the Maryland population from the 2000 Census. Table A-2 compares the

weighted percent of survey respondents to the percent of households from the Census by region. This

shows that 48.4 percent of the sample was from the Baltimore metropolitan region, 31.6 percent from

the Washington metropolitan region, 12.6 percent from the Eastern Shore/Southern Maryland region,

and 8.1 percent from the Western Maryland region. These were nearly identical to the Census figures

and showed how closely our weighted sample matched the number of households in Maryland by

region.

Table A-2Number of Households

Census Survey

% %

Eastern Shore/ Southern Maryland 12.8 12.6

Western Maryland 8.2 8.1

Baltimore Metro 47.4 48.4

Washington Metro 31.6 30.9

A7

Tables A-3 through A-8 disaggregate of the sample by gender, race/ethnicity, age, education,

household income and marital status. The weighted response rate by gender, race and ethnicity

closely matched the gender, racial and ethnic composition of the Census. See Tables A-3 and A-4.

Table A-3Gender


WesternMaryland

BaltimoreMetro

Washington Metro

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Male 48.2 49.6 49.0 49.6 49.9 50.0 48.0 49.9 47.8 49.1

Female 51.8 50.4 51.0 50.4 50.1 50.0 52.0 50.1 52.2 50.9

Table A-4Race or Ethnicity


WesternMaryland


Census%

Survey%

Census%

Survey%

Census%

Survey %

Census%

Survey%

Census%

Survey%

White/ Caucasian 62.1 64.0 77.8 81.1 89.9 92.7 66.0 64.9 42.6 47.5

Black/ AfricanAmerican

27.7 28.1 17.5 18.1 6.1 6.1 27.5 27.8 37.5 38.7

Other 10.3 7.9 4.6 0.8 4.0 1.2 6.5 7.3 19.9 13.8

When the age composition of the sample is compared to the age composition of people 20 years and

older in the Census, substantial differences were found (Table A-5). For example, 20 to 35 year olds

A8

were under represented by about 10 percent, and 51 to 65 year olds were over represented by about

the same amount. Persons over 65 were over represented by about 5 percent. The survey did not

screen to ensure age representativeness because the sample was adults in households in which

someone living in the household paid the electric bill. Having a sample that is more closely age

representative might produce somewhat different results, if only marginally so.

Table A-5Current Age


WesternMaryland


Census%

Survey %

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

20 yrs to 35 yrs old 30.4 20.3 28.2 14.5 29.1 16.5 30.0 22.4 32.2 20.4

36 yrs to 50 yrs old 34.1 37.5 34.1 35.1 33.5 35.3 33.7 40.9 34.9 33.9

51 yrs to 65 yrs old 20.7 30.2 21.9 34.4 20.7 30.6 20.5 27.5 20.4 32.6

Older than 65 yrs 14.8 10.0 15.9 13.0 16.7 16.5 15.7 8.4 12.5 9.7

Refused N/A 1.9 N/A 3.1 N/A 1.2 N/A 0.8 N/A 3.4

When the educational attainment of the weighted sample is compared to the educational attainment

of those in the Census, persons with a high school degree or less were found to be under represented

in the survey compared to the Census by about 21 percent and college graduates were over represented

by about 16 percent. This was because people with high school or less education are more likely to

be in living arrangements where direct payment for electricity is less likely (e.g., living in an

apartment, living with their family, etc.). Here again, a sample that is more representative based on

education might produce somewhat different results.

A9

Table A-6Education Attainment

MarylandStatewide


WesternMaryland


Census % Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

High school or less 42.9 21.4 52.7 26.7 53.6 33.3 45.2 23.0 32.5 13.8

Some college 20.3 18.6 21.6 27.5 18.9 28.6 20.1 19.0 20.5 11.9

College graduate 23.3 39.7 18.3 30.5 19.2 27.4 22.7 39.8 27.4 46.6

Some graduate courseor graduate degree

13.4 19.0 7.4 14.5 8.3 9.5 11.9 17.2 19.6 26.3

Refused N/A 1.2 N/A 0.8 N/A 1.2 N/A 1.0 N/A 1.6Note: Census is for people over age of 25

When the average household incomes of the weighted sample are compared to the Census, families

with incomes under $25,000 were under represented by about 4 percent. However, those with

incomes between $25,000 and $50,000 were over represented by around 11 percent. These are

probably because lower income people were more likely to be excluded from the sample because of

living arrangements (e.g. living in apartments or other arrangements in which they do not pay the

electricity bill). Moreover, 22.5 percent of the respondents refused to answer the income question,

and it is, thus, not possible to determine the distribution of income of those who refused to answer this

question.

A10

Table A-7Household Income

MarylandStatewide


Western MD Baltimore Metro WashingtonMetro

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey %

Less than $25,000 20.6 8.6 22.5 10.8 25.8 8.2 23.6 11.4 13.8 3.4

$25,000 to $49,999 26.1 15.3 28.0 13.8 28.9 14.1 26.6 18.0 23.9 11.9

$50,000 to $74,999 21.6 15.7 22.5 17.7 21.5 21.2 21.2 14.2 21.8 15.9

$75,000 to $99,999 13.6 14.8 13.4 13.1 12.0 11.8 12.8 12.4 15.3 20.0

$100,000 or more 18.1 22.3 13.6 20.0 11.8 17.6 15.9 17.4 25.2 32.2

Do not know N/A 0.8 N/A 1.5 N/A 2.4 N/A 0.8 N/A 0

Refused N/A 22.5 N/A 23.1 N/A 24.7 N/A 25.8 N/A 16.6Note: Census data is from 1999

Finally, the marital status reported in the survey was compared to the Census. The categories were

not the same. The survey asked whether respondents were married or in a domestic partnership. The

Census does not use the domestic partnership category and treats people in this type of relationship

as single. Also, the Census does not include separated individuals with the divorced or widowed.

Consequently, this report combined the single and married Census categories and single and married

or domestic partnership categories from the survey sample. The results are shown in Table A-8, which

shows that the modified marital status from the weighted sample was similar to that of the Census.

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Table A-8Marital Status

MarylandStatewide


WesternMaryland

BaltimoreMetro

WashingtonMetro

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Census%

Survey%

Single/ Married/Domestic Relationship

84.7 84.1 84.5 85.0 84.8 86.4 83.7 81.1 86.3 87.9

Separated/ Divorced/Widowed

15.3 15.9 15.5 15.0 15.2 13.6 16.3 18.9 13.8 12.1

This analysis of the sociodemographic characteristics of the survey respondents has revealed that the

weighted sample of this survey is similar to those in the Census, except that it over represented

middle-aged and older respondents, and those with higher levels of education and higher income,

when compared with the 2000 U.S. Census figures for Maryland. Given that the current sample

included only adult heads of households in Maryland in which someone living in that household paid

the electric bill, renters and others who do not pay electricity bills were excluded from the survey. It

is likely that renters generally are either significantly younger or older than the respondents in this

study. It is also likely that renters have lower incomes and lower educational attainment (due to the

close association between education and income).

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Consumer Status Characteristics of the Sample

This section addresses the characteristics of consumers in terms of the consumer’s relation to their

electric utility. It provides background information about who is paying the electric bills, the type of

bills, which electric company they use, and their usage of electricity.

The survey asked respondents who paid the electric bill most of the time in their household. Three

fourths (75.0 percent) of respondents reported that they paid their electric bill most of the time in their

household (Table A-9). Ninety-eight percent of respondents reported that either they or their

spouse/partner paid the electric bill most of the time. This gives a high degree of confidence that the

respondents were knowledgeable about their electric bills and household decisions regarding electric

service. Although Baltimore metropolitan and Western Maryland residents were more likely to report

paying the electric bill themselves most of the time compared to residents in other regions, this

statistical difference does not appear to be substantively meaningful.

Table A-9 Person who pays the electric bills


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Respondent 766 75.0 92 71.3 63 76.8 392 79.5 219 69.1

Spouse/ partner 235 23.0 36 27.9 17 20.7 92 18.7 90 28.4

Other 20 2.0 1 0.8 2 2.4 9 1.8 8 2.5


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Respondents were asked whether their electric bills varied each month or whether they were on

average payment plans. Table A-10 shows that 71.7 percent of the respondents reported that their

electric bill varied each month, while 28.3 percent were on average payment plans. Western Maryland

and the Baltimore metropolitan region were more likely to have an average payment plan.

Table A-10 Type of electric bill


WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Varies each month 737 71.7 104 79.4 58 69.9 333 66.9 242 76.6

Average payment plan 291 28.3 27 20.6 25 30.1 165 33.1 74 23.4

Total 1,028 100 131 100 83 100 498 100 316 100Note: Regional differences were statistically significant at the p =< 0.01 level.

Next, we wanted to know what company provided respondents’ electricity service. The highest

percentage of respondents were customers of BGE (51.3 percent), followed by Pepco (22.4 percent),

and Allegheny Power (7.6 percent). This compares quite favorably to the actual distribution of

electricity customers (Table A-11). Nearly 9 percent of the respondents did not know the name of

their electric utility company or named a company other than those that provide electricity service in

Maryland.

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Table A-11 Electric Companies Providing Services:

Sample Respondents and Actual Service Distribution

Sample Respondents Actual Proportion of ResidentialCustomers Serveda

# %

Allegheny Power 78 7.6 10.0

BGE - Baltimore Gas & Electric 531 51.3 53.2

Conectiv Power 55 5.3 8.2

Pepco 232 22.4 22.8

Southern Maryland Electric Coop 47 4.6 5.8

Other and Do not know 92 8.9 NA

Total 1,035 100 100aSource: Maryland Public Service Commission and Southern Maryland Electric Cooperative (SMECO), September 2002.

Table A-12Electric Company


WesternMaryland

BaltimoreMetro

WashingtonMetro

# # # #

Allegheny Power 0 175 1 3

BGE 2 0 371 32

Conectiv Power 75 1 4 0

Pepco 5 0 0 183

Southern Maryland Electric Coop 69 0 0 3

Other and Do not know 49 24 4 34

Total 200 200 380 255 Note: Data are not weighted.

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Electric company service is geographically constrained within certain regions of the state of Maryland.

The data in table A-12 provide the actual, unweighted data from the survey regarding division of

electricity service.

Strictly for informational purposes, electric power usage information was asked. Table A-12 shows

that 78.4 percent of respondents reported using electricity to provide power for central air

conditioning, 21.7 percent for window air conditioning, 33.1 percent for heat pump, and 28.4 percent

for other electric heat. These figures do not add up to 100 percent because the respondent could

choose more than one response. Washington metropolitan and Eastern Shore/Southern Maryland

respondents reported higher levels of use of electricity for central air conditioning, while Western

Maryland and Baltimore metropolitan respondents reported higher use of electricity for window air

conditioners. The highest levels of use of electricity to provide power for heat pumps were found in

the Eastern Shore/Southern Maryland and Western Maryland regions.

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Table A-13Major Appliances Powered by Electricity

MarylandStatewide

EasternShore/ So.Maryland

WesternMaryland

BaltimoreMetro

WashingtonMetro

# % # % # % # % # %

Central air conditioning* Yes 810 78.4 105 80.8 58 69.0 347 69.4 300 94.0

No 223 21.6 25 19.2 26 31.0 153 30.6 19 6.0

Total 1033 100 130 100 84 100 500 100 319 100

Window air conditioning* Yes 225 21.7 27 20.6 24 28.6 146 29.1 28 8.8

No 811 78.3 104 79.4 60 71.4 355 70.9 292 91.3

Total 1036 100 131 100 84 100 501 100 320 100

Heat pump** Yes 342 33.1 57 43.5 32 38.1 149 29.8 104 32.8

No 690 66.9 74 56.5 52 61.9 351 70.2 213 67.2

Total 1032 100 131 100 84 100 500 100 317 100

Other electric heat*** Yes 293 28.4

No 739 71.6

Total 1032 100*Regional differences were statistically significant at the p =< 0.001 level.** Regional differences were statistically significant at the p =< 0.05 level.*** Regional differences were not statistically significant.

Table A-13 shows that consumers in the Eastern Shore/Southern Maryland and Western Maryland

regions have a greater tendency to heat their homes with electricity.

B1

Appendix B Survey Questionnaire

Maryland Office of the People’s Counsel SurveyAugust 2002

Survey Introduction:

Hello. My name is ________. I'm calling from the University of Maryland Baltimore County. We are conducting a survey for the state of Maryland about electric utility services. Would youhave a few minutes to participate? Your responses will be confidential and your participation isvoluntary.

Screener question:

S1. How familiar are you with your electric utility billing and service for your residence?

very familiarsomewhat familiarnot toonot at all

S2. Is there someone else in the household who is familiar with the electric utility billing andservice for your residence and may I speak with them?

Yes If yes, go to question 1.No If no, terminate interview.

1. Does the amount of your electric bill vary each month or are you on an average paymentplan where your bill remains approximately the same each month? These plans aresometimes called Level Billing, Budget Billing, or Average Payment Plans.

Varies each month Average payment plan/budget billing

Don’t know

B2

2. What is the name of your electric utility company? (Do Not Read Choices)

A&N Electric Cooperative Allegheny Power BGE–Baltimore Gas and Electric Company Berlin Municipal Electric Company Choptank Electric Cooperative Conectiv Power Delmarva Power and Light Easton Utilities Commission Hagerstown Municipal Electric Light Plant Pepco Pepco Energy Services Potomac Edison Somerset Rural Electric Cooperative Southern Maryland Electric Cooperative Thurmont Municipal Light Company Washington Gas Energy Services Williamsport Municipal Light Company Other

Don't know

Does your household use electricity to provide power for any of the following items inyour home?

YES NO DK

3. Central air conditioning?4. Window air conditioners?5. Heat pump?6. Other electric heat?

7. Thinking about only your electricity, not any other utilities like gas or water, in general,would you say that you are very satisfied, satisfied, neutral, dissatisfied or very dissatisfiedwith the price of electricity provided by your electric utility company?

Very satisfied Satisfied Neutral Dissatisfied Very dissatisfied Don't know

No opinion

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8. Thinking about only your electricity, not any other utilities like gas or water, in general,would you say that you are very satisfied, satisfied, neutral, dissatisfied or very dissatisfiedwith the reliability of the electric power provided by your utility company?

Very satisfiedSatisfiedNeutralDissatisfiedVery dissatisfiedDon't knowNo opinion

(If the interviewer is asked what is meant by “reliability”, say that we mean theconsistency of electric service without blackouts, power surges, or periods of low power.)

9. Thinking about your average electric bill, just your electric bill, during the past 12 months,would you say that it increased, decreased, or stayed about the same compared to the yearbefore?

Increased Decreased Stayed about theDon't know

10. If you had to choose the main reason why your average electric bill has increased over thepast year, would you say it is because...? (Choose Only One.)

Your household used more electricityElectric rates increasedOr bothFor some other reasonDon’t know

11. If you had to choose the main reason why your average electric bill decreased over the pastyear, would you say it is because...? (Choose Only One.)

Your household used less electricityElectric rates decreasedOr bothFor some other reasonDon’t know

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12. Some states cap electric rates. This means that rates cannot increase because of stateregulation. To your knowledge, are electric rates capped in Maryland?

Yes No Don’t Know

13. To your knowledge, is the cap on electric rates in Maryland scheduled to be removed anytime in the next few years?

YesNoDon’t Know

14. In your opinion, if electric rates were capped would removing the cap increase, decrease, ormake no difference to electric prices?

IncreaseMake no differenceDecreaseDon’t Know

15. In some states, the law permits customers to have a choice among suppliers of electricity. To your knowledge, does Maryland law allow consumers a choice among electricitysuppliers?

YesNoDon’t Know

16. In your opinion, would allowing consumers a choice of electricity suppliers increase,decrease, or make no difference in electric prices?


17. If electricity price caps were removed and consumers had a choice among electricitysuppliers, would you expect overall electric prices to increase, decrease, or stay the same?


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18. Would you prefer to have a choice among electricity suppliers?

Yes No No opinionDon’t know

19. How important is it to you to have a choice among electricity suppliers? Is it:

Very ImportantImportantNeutralNot very importantNot important at allDon't Know

20. In some states, electric rates are regulated. This means the price of electricity is set by astate agency. Would you prefer that electric rates be regulated by a state agency?


21. How important is it to you that electric rates be regulated by a state agency? Is it:

Very ImportantImportantNeutralNot very importantNot important at allDon't Know

22. In order to have a choice among electricity suppliers, would you be willing to have stateregulation of electric prices be eliminated, thus letting electric prices vary according tomarket conditions?


B6

23. Should local governments be permitted to act as group buyers of electricity forconsumers?


24. Have you tried to change electricity suppliers?

Yes No Don’t know

25. What are the main reasons that led you to attempt to change from your electricity supplier? (Interviewer does not read. Check all that apply.)

a) Lower pricesb) More reliable service (fewer outages)c) Incentives for maintaining an energy efficient homed) Electricity derived from sources that offer greater protection to the environmente) The reputation of the supplierf) Dissatisfied with current supplierg) Other reasonh) Don’t know

(After respondent finishes, interviewer asks “Were there any other reasons” and records theadditional responses.)

26. Did you actually change suppliers?

Yes NoDon’t know

B7

27. What are the main reasons that led you to remain with your current supplier? (Interviewerdoes not read. Check all that apply)

a) No other electricity supplier in the areab) No price advantage in changingc) No service advantage in changingd) No benefit to the environment / supplier not offering environmentally friendly servicee) Did not know there was a choicef) Did not know who to contactg) Was not approached / did not see advertisements by competing suppliersh) Am satisfied with my current supplieri) Not interested in changingj) Process was too complicatedk) Problems with my creditl) Company would not accept my applicationm) Other reasonsn) Don’t know

(After respondent finishes, interviewer asks “Were there any other reasons” and records theadditional responses.)

28. What would a competing electricity supplier need to offer to you in order for you toconsider switching from your current supplier? (Interviewer does not read. Check all thatapply)

a) Lower pricesb) More reliable service (fewer outages)c) Incentives for maintaining an energy efficient homed) Electricity derived from sources that offer greater protection to the environmente) The reputation of the supplierf) Other reasonsg) Nothing could make me switch from my current supplierh) Don’t know

29. (If “lower prices” was mentioned, then ask) What percentage reduction in electric pricewould you need in order to consider switching electricity supplier?

1% to 5%6% to 10%11% to 15%16% to 20%More than 20%Don’t know

B8

30. If you had a problem or complaint with your electric service, who would you contact? (Interviewer does not read. Check all that apply.)

a) Customer Service department of your utilityb) Your electric company / supplierc) Your United States Congressman or Senatord) Your Maryland State Delegate or Senatore) An attorneyf) The Governor's officeg) The state Attorney General’s officeh) Other elected officialsi) Law enforcementj) The Better Business Bureauk) Chamber of Commercel) The Office of the People's Counselm) The Maryland Public Service Commissionn) The regulatoro) MD State Government websitep) Some other organizationq) No oner) Don’t know

31. If you did not get a satisfactory response, then, who would you contact? (Interviewer does not read. Check all that apply.)

a) Customer Service department of your utilityb) Your electric company / supplierc) Your United States Congressman or Senatord) Your Maryland State Delegate or Senator )e) An attorneyf) The Governor's officeg) The state Attorney General’s officeh) Other elected officialsi) Law enforcementj) The Better Business Bureauk) Chamber of Commercel) The Office of the People's Counselm) The Maryland Public Service Commissionn) The regulatoro) MD State Government websitep) Some other organizationq) No oner) Don’t know

B9

32. Many states have agencies that regulate electric companies. To your knowledge, doesMaryland have such an agency?

Yes NoDon’t know

33. What is the name of that agency? (Interviewer - Do Not Read)

Maryland Public Service CommissionOtherDon’t know

34. Is your impression of that agency mostly positive, mostly negative, or neutral?

Mostly positiveNeutralMostly negativeDon't knowNo opinion

35. Many states have agencies that advocate on behalf of residential electricity consumers. Toyour knowledge, does Maryland have such an agency?

Yes NoDon’t know

36. What is the name of that agency? (Interviewer - Do Not Read)

Maryland Office of People’s CounselOtherDon’t know

37. Is your impression of that agency mostly positive, mostly negative, or neutral?

Mostly positiveNeutralMostly negativeDon't knowNo opinion

B10

I'd like to ask you a few questions about you and your household.

38. What is your current age? __

39. What is your highest level of education?

Did not complete high schoolHigh school graduate/GEDSome collegeCollege graduateSome graduate or professional coursesGraduate or professional education or degreeRefused

40. Note sex:

MaleFemale

41. What county do you live in?

AlleganyAnne Arundel Baltimore CityBaltimore CountyCalvertCarolineCarrollCecilCharlesDorchesterFrederickGarrettHarfordHowardKentMontgomeryPrince George'sQueen Anne'sSt. Mary'sSomersetTalbotWashingtonWicomicoWorcester

B11

42. How many people, including yourself, currently reside in your residence? ________

43. Do you rent or own your current residence?

RentOwnOtherDon't knowRefused

44. What is your race or ethnicity?

White/CaucasianBlack/African AmericanHispanic or LatinoAsian or Pacific IslanderNative American or Alaskan NativeOtherDon't knowRefused

45. I'm now going to read you some income categories. Please stop me when I get to thecategory that includes your household income before taxes in 2001. If not sure, please giveyour best estimate.

Less than $25,000$25,000 to $49,999$50,000 to $74,999$75,000 to $99,999$100,000 or moreDon't knowRefused

46. Are you:SingleMarriedSeparated/DivorcedWidowedOther/Refused

B12

47. Finally, who pays the electric bill most of the time in your household?

Respondent Spouse/partnerParentOther adult member of householdOtherDon’t know

48. Note region:

Eastern Shore/Southern MarylandWestern MarylandBaltimore MetroWashington Metro

This concludes our interview. Thank you for participating.

B13

Documents

Maryland Residential Consumer Survey: Views About ... · i Maryland Residential Consumer Survey: Views on Electricity Service and Deregulation Executive Summary The results of a telephone